B-164641, OCT 18, 1971

B-164641, OCT 18, 1971

CONTRACTS - CHANGED CONDITIONS - BREACH OF CONTRACT DECISION THAT CLAIM FOR $16,246.30 SUBMITTED BY UNITED PACIFIC INSURANCE COMPANY AS SURETY OF THE DISCOUNT COMPANY INCIDENT TO DISCOUNT'S CONTRACT WITH THE FOREST SERVICE TO CONSTRUCT THE NORTH WALDO CAMPGROUND, WILLAMETTE NATIONAL FOREST, OREGON, MAY NOT BE PAID. THE COMP. GEN. IS OF THE OPINION THAT THE RISK OF DELAYED COMPLETION OF ACCESS ROADS RESTS WITH THE CONTRACTOR IN ACCORDANCE WITH PARAGRAPH 13 OF THE CONTRACT GENERAL PROVISIONS. THEREFORE, SINCE NO CHANGE IN THE REQUIRED WORK WAS ORDERED, COSTS EXPERIENCED AS A RESULT OF DELAYED COMPLETION OF THE ROADS ARE NOT COMPENSABLE TO DISCOUNT'S SURETY. FURTHER, SUCH COSTS MAY NOT BE ALLOWED ON A BREACH OF CONTRACT THEORY IN THE ABSENCE OF A CONTRACT PROVISION GUARANTEEING COMPLETION OF THE ACCESS ROAD WORK BY THE DATE PROVIDED IN THE DISCOUNT CONTRACT.

TO MR. RIEHL:

BY LETTER DATED DECEMBER 15, 1970, REED H. JENSEN, FORMER AUTHORIZED CERTIFYING OFFICER FOR REGION 6, DEPARTMENT OF AGRICULTURE, FOREST SERVICE, FURNISHED OUR OFFICE WITH SUPPLEMENTAL INFORMATION CONCERNING THE PROPOSED PAYMENT, IN THE AMOUNT OF $16,246.30, PURSUANT TO CHANGE ORDER NO. 1 (REVISED) UNDER FOREST SERVICE CONTRACT NO. 001850, WITH THE DISCOUNT CO. THE CONTRACT COVERED THE CONSTRUCTION OF THE NORTH WALDO CAMPGROUND, WILLAMETTE NATIONAL FOREST, OREGON.

OUR DECISION, B-164641, AUGUST 7, 1968, CONCLUDED THAT PAYMENT OF THE CLAIM WAS NOT AUTHORIZED FOR THE REASON THAT DELAYS CAUSED BY THE FAILURE OF ANOTHER GOVERNMENT CONTRACTOR TO COMPLETE CONSTRUCTION OF ACCESS ROADS TO THE WORK SITE BY THE DATE SET OUT IN DISCOUNT'S CONTRACT DID NOT RESULT IN A CHANGED CONDITION WHICH WAS OTHERWISE COMPENSABLE UNDER THE CONTRACT.

ON THE MATTER OF THE GOVERNMENT'S LIABILITY IN GENERAL FOR THE DELAYS INVOLVED HERE, THE DECISION STATED:

"AS A GENERAL RULE, THE GOVERNMENT IS NOT LIABLE FOR DELAYS IN MAKING WORK OR MATERIAL AVAILABLE TO A CONTRACTOR. UNITED STATES V RICE, 317 U.S. 61, AND UNITED STATES V FOLEY CO., SUPRA. ALSO, UNLESS THE GOVERNMENT GUARANTEES TO MAKE THE SITE AVAILABLE AT A PARTICULAR TIME, THE GOVERNMENT IS NOT LIABLE IN DAMAGES FOR THE DELAYS CAUSED BY ANOTHER CONTRACTOR UNLESS THE GOVERNMENT WAS IN SOME WAY AT FAULT IN MAKING THE SITE AVAILABLE AT AN EARLIER DATE. BEN C. GERWICK, INC. V UNITED STATES, 152 CT. CL. 69."

THE DECISION NOTED ALSO THAT THERE WAS SOME INDICATION THAT THE DELAY IN COMPLETION OF THE ACCESS ROADS MIGHT BE ATTRIBUTABLE TO THE GOVERNMENT'S FAILURE TO MAKE GOVERNMENT-FURNISHED ROCK AVAILABLE TO THE ROAD BUILDING CONTRACTOR. WE THEREFORE DEFERRED FURTHER ACTION ON THE CLAIM PENDING RECEIPT OF ADDITIONAL INFORMATION. FINALLY, THE DECISION POINTED OUT THAT IT WAS NOT CLEAR AS TO WHETHER ANY ADDITIONAL DELAYS WOULD BE ENCOUNTERED AND STATED THAT "IT WOULD BE PREFERABLE TO SETTLE ALL POSSIBLE CLAIMS ARISING FROM DELAYS ATTRIBUTABLE TO THE GOVERNMENT RATHER THAN TO EFFECT A PARTIAL DELAYS-DAMAGES SETTLEMENT."

SUBSEQUENT TO OUR 1968 DECISION, DISCOUNT'S CONTRACT WAS TERMINATED FOR DEFAULT AND ITS SURETY, UNITED PACIFIC INSURANCE COMPANY, TOOK OVER COMPLETION OF THE CONTRACT. THE SURETY, THEREFORE, BECAME SUBROGATED TO ALL RIGHTS OF THE DISCOUNT CO. UNDER THE CONTRACT, INCLUDING THE SUBJECT CLAIM. SETTLEMENT OF THE SUBJECT CLAIM IS NOW ADMINISTRATIVELY RECOMMENDED ON THE BASIS EITHER THAT THE DELAY IN COMPLETION OF THE ACCESS ROADS BEYOND THE DATE ESTIMATED IN THE DISCOUNT CONTRACT IS COGNIZABLE UNDER THE CONTRACT CHANGES CLAUSE OR THAT SUCH DELAY AMOUNTED TO A BREACH OF CONTRACT.

FOR REASONS SET OUT BELOW, WE CONCLUDE THAT THE CLAIM FOR ADDITIONAL COMPENSATION IS NOT ALLOWABLE UNDER EITHER OF THE BASES ADVANCED ABOVE.

WITH RESPECT TO CONSTRUCTION OF ACCESS ROADS, THE DISCOUNT CO. CONTRACT PROVIDED AS FOLLOWS:

"SURFACING OF THE WALDO LAKE ROAD NO. 204 AND SOUTH FORK ROAD NO. 163 AND CONSTRUCTION OF ISLET CAMPGROUND ROAD NO. 2170 IS EXPECTED TO BE IN PROGRESS DURING THE TIME OF THIS CONTRACT. SOME DELAY IN ACCESS TRAVEL, EQUIPMENT HAULING AND LOG HAULING OVER ROADS NO. 204, 163 AND 2170 MAY BE EXPECTED DUE TO THE SURFACING AND CONSTRUCTION OPERATIONS. CONTRACTOR'S ATTENTION IS DIRECTED TO ARTICLE 14, OTHER CONTRACTS, OF SF-23A, GENERAL PROVISIONS.

"IT IS ANTICIPATED THAT THE CONSTRUCTION OF ISLET ROAD NO. 2170 AND NORTH WALDO ROAD #2170-A WILL NOT BE COMPLETED UNTIL APPROXIMATELY SEPTEMBER 15, 1967. THE CONTRACTOR MAY NOT UTILIZE THESE ROADS FOR HAULING OF LOGS AND EQUIPMENT UNTIL AFTER THEIR COMPLETION, UNLESS SEPARATE ARRANGEMENTS ARE MADE BY AND BETWEEN MANN CONSTRUCTION COMPANY AND THE CONTRACTOR."

ALSO, PARAGRAPH 13 OF THE CONTRACT GENERAL PROVISIONS, STANDARD FORM 23- A, ENTITLED "CONDITIONS AFFECTING THE WORK," PROVIDED AS FOLLOWS:

"THE CONTRACTOR SHALL BE RESPONSIBLE FOR HAVING TAKEN STEPS REASONABLY NECESSARY TO ASCERTAIN THE NATURE AND LOCATION OF THE WORK, AND THE GENERAL AND LOCAL CONDITIONS WHICH CAN AFFECT THE WORK OR THE COST THEREOF. ANY FAILURE BY THE CONTRACTOR TO DO SO WILL NOT RELIEVE HIM FROM RESPONSIBILITY FOR SUCCESSFULLY PERFORMING THE WORK WITHOUT ADDITIONAL EXPENSE TO THE GOVERNMENT. THE GOVERNMENT ASSUMES NO RESPONSIBILITY FOR ANY UNDERSTANDING OR REPRESENTATIONS CONCERNING CONDITIONS MADE BY ANY OF ITS OFFICERS OR AGENTS PRIOR TO THE EXECUTION OF THIS CONTRACT, UNLESS SUCH UNDERSTANDING OR REPRESENTATIONS BY THE GOVERNMENT ARE EXPRESSLY STATED IN THE CONTRACT."

THE RECORD REVEALS THAT THE CONTRACT WAS AWARDED TO DISCOUNT ON AUGUST 28, 1967, WITH A NOTICE TO PROCEED ISSUED SEPTEMBER 14, 1967, EFFECTIVE SEPTEMBER 20, 1967. AT THE TIME THE NOTICE TO PROCEED WAS ISSUED, HOWEVER, THE ACCESS ROADS HAD NOT BEEN COMPLETED INASMUCH AS THE WORK AREA HAD BEEN CLOSED FROM AUGUST 14, 1967, THROUGH SEPTEMBER 13, 1967, BECAUSE OF THE DANGER OF FIRE. ALTHOUGH REPRESENTATIVES OF THE ROAD BUILDING CONTRACTOR, MANN CONSTRUCTION COMPANY, ADVISED REPRESENTATIVES OF DISCOUNT ON SEPTEMBER 20, 1967, THAT THE TIME REQUIRED FOR ROAD CONSTRUCTION SHOULD NOT EXCEED 7 DAYS, THE WORK HAD NOT BEEN PERFORMED BY THE TIME THE WORK SITE WAS CLOSED DOWN FOR THE WINTER AND WAS NOT IN FACT FINISHED UNTIL THE FOLLOWING CONSTRUCTION SEASON.

THAT THE CONSTRUCTION OF THE ACCESS ROADS WAS OF CONCERN TO DISCOUNT IS INDICATED BY THE FACT THAT ASSURANCE WAS SOUGHT BY THE COMPANY AT A PRE- BID CONFERENCE IN JULY 1967, AND LATER AT A SITE INSPECTION VISIT ON AUGUST 30, 1967, AS TO WHEN IT WAS ANTICIPATED THAT ROAD CONSTRUCTION WOULD BE COMPLETED. IN FACT, THE DISCUSSION OF THIS MATTER AT THE JULY 1967 PRE-BID CONFERENCE APPEARS TO HAVE RESULTED IN THE INVITATION AMENDMENT STIPULATING SEPTEMBER 15, 1967, AS THE ANTICIPATED COMPLETION DATE. THE SEPTEMBER 15 DATE WAS REPORTEDLY ITERATED AT THE AUGUST 30 MEETING. WE CANNOT CONCLUDE, HOWEVER, THAT THESE DISCUSSIONS, COUPLED WITH THE CONTRACT STATEMENT OF THE ESTIMATED COMPLETION DATE QUOTED ABOVE, ARE SUFFICIENT TO AMOUNT TO A GUARANTEE THAT THE ACCESS ROADS WOULD BE COMPLETED BY THAT DATE. BEN C. GERWICK, INC. V UNITED STATES, 152 CT. CL. 69 (1961). AS A MATTER OF FACT, IT DOES NOT APPEAR THAT DISCOUNT CONSIDERED THE ESTIMATED COMPLETION DATE TO BE A GUARANTEE SINCE REPRESENTATIVES OF THE COMPANY INDICATED AT A PRE-WORK CONFERENCE ON SEPTEMBER 14, 1967, THAT ARRANGEMENTS WOULD BE MADE WITH MANN CONSTRUCTION COMPANY FOR THE USE OF THE UNCOMPLETED ACCESS ROADS UPON COMMENCEMENT OF WORK BY DISCOUNT ON SEPTEMBER 20.

WE, THEREFORE, ARE OF THE OPINION THAT THE RISK OF DELAYED COMPLETION OF THE ACCESS ROADS RESTED WITH THE DISCOUNT CO. IN ACCORDANCE WITH PARAGRAPH 13 OF THE CONTRACT GENERAL PROVISIONS, QUOTED ABOVE. COSTS EXPERIENCED AS A RESULT OF DELAYED COMPLETION OF THE ROADS, THEREFORE, ARE NOT COMPENSABLE TO DISCOUNT UNDER THE CHANGE CLAUSE SINCE NO CHANGE IN THE REQUIRED WORK WAS ORDERED. NEITHER MAY SUCH COSTS BE ALLOWED ON THE THEORY OF BREACH OF CONTRACT IN THE ABSENCE OF A CONTRACT PROVISION GUARANTEEING COMPLETION OF THE WORK BY THE DATE PROVIDED IN THE DISCOUNT CONTRACT.

ACCORDINGLY, AND SINCE THERE IS NO CLEAR INDICATION THAT THE GOVERNMENT WAS AT FAULT IN THE DELAYED COMPLETION OF THE ACCESS ROADS, WE FIND NO BASIS TO AUTHORIZE PAYMENT OF THE SUBJECT CLAIM IN THE AMOUNT OF $16,246.30.

AS REQUESTED, THE MANN CONSTRUCTION COMPANY CONTRACT FILE IS RETURNED HEREWITH.